In reply Boeing, Rentschler, Chance Vought, and others, fearing the giant thus created, had consolidated in a merger of their own. Unlike the Curtiss-Wright consolidation, which, to them, smacked of Wall Street, the new one was to comprise only sound companies, those which had already proved profitable or seemed likely to continue to do so. The big idea was to bring together, under one leadership, the best in airplanes, engines, propellers, and transport systems in order to coordinate engineering experience in a way that would speed progress. For passenger air transport still seemed to hang on a dead center: it was impossible to reduce rates unless volume could be stepped up, and volume refused to step up until costs came down.
The new outfit, which had taken the name of the United Aircraft and Transport Corporation, planned to get its engineering heads together and create improved aircraft designed to break that log jam. Fred Rentschler and Bill Boeing had come to Los Angeles to look over some of the western companies like Northrup, which had already joined up, and Menasco, which would like to. Reading about the Curtiss-Wright consolidation, I had to smile at the idea I had once had of depending upon those two for air-cooled engine competition. Save for Fred Rentschler and Pratt and Whitney, they would now have us by the neck.
It was an interesting circumstance that the particular group should have joined up in the new outfit. For I had put the bee on Chance Vought that had produced the prescription for the Pratt and Whitney Wasp, and had later sent Bill Boeing to Fred Rentschler for the engines for his mail planes, the very engines that had made possible a tidy profit out of a venture that Bill’s competition had called impossible. And save for the Martin torpedo bombers, this group had supplied all the equipment for our carriers, including the engines for the Martins. And the marriage seemed natural from another point of view: the parties at interest were all pioneers with a zeal for aviation and they had all played the game according to Hoyle.
On arrival at the Biltmore I found another old-timer in their company. Thomas Hamilton, like Bill Boeing, had grown up in Seattle, but unlike Bill Boeing he had not had money to spend on airplanes. Instead he had taught himself to fly in a crate of his own construction and had then built his own business. On the outbreak of World War I, Tom had rushed to Washington to get a contract to build airplanes but had been diverted to Milwaukee, Wisconsin, the home of furniture manufacture, to make propellers. He had, however, established his own Metalplane Company and built a high-wing metal monoplane that, he claimed, antedated the Ford. And when the new United Aircraft and Transport Corporation had looked around for a propeller company to round out their line, they had taken over Tom Hamilton, his Hamilton Aero Manufacturing Company, and his Hamilton Metalplane Company. Tom, like every other Tom, Dick, and Harry of that time, had been in the stock market but, unlike some of them, had done well.
At dinner that evening, I noted the changes that had come over these men. The time had been when they had scratched gravel for the last trace of “color” that might lie close to bedrock. Now they flew high, wide, and handsome on the crest of the current boom. They had flown in aboard their own Ford Trimotor; they had taken a suite at the Biltmore and now they ordered the exotic foods on the menu. One advantage of the naval service was that much of this had passed us by; we had security, but no wealth. These men had wealth but little security, and even at the height of the great boom of the late ’twenties, Fred Rentschler, at least, clearly foresaw the ultimate outcome. To him the whole thing was crazy—a house of cards built on a foundation of sand, foredoomed to collapse at the first real tremor. Meanwhile they shop-talked back and forth, discussing their current management problems, one of which seemed to concern Tom Hamilton and his propeller company.
It seemed that after I had taken the decision, away back there in BUAERO, that we would use the new metal propellers in place of the wooden ones, two companies had competed for the business—the Hamilton Aero Manufacturing Company, of Milwaukee, and the Standard Steel Propeller Company, of Pittsburgh. In the middle had sat the Reed Propeller Company, owners of the patents taken out by Dr. Sylvanus Reed. These patents, covering metal propeller blades made of “light alloys, solid throughout the outer half of their length,” had been discounted by both Hamilton Aero and Standard Steel, who had declared them invalid. However, the new Curtiss-Wright Corporation had absorbed the Reed Company to put the power of Curtiss-Wright dollars behind the patents.
Meanwhile, Tom Hamilton, of Hamilton Aero, and Harry Kraeling, of Standard Steel, fought their conflict on other grounds. To match Tom Hamilton’s propeller-design savvy, Harry Kraeling hired Frank Caldwell, the Army’s civilian propeller expert, away from the Army. Frank Caldwell had a few inventions himself and was one of the best informed men in the industry. Both companies sold “two-piece” propellers—that is, duralumin blades mounted in steel hubs that permitted blade-angle adjustment on the ground. The Reed Company held to single-piece, fixed-pitch props made of solid duralumin. It was one of these that had dumped me into the dirt at Anacostia, back in 1926, when a blade had broken off close to the hub. I still kept a section of that blade as a souvenir. Now after United Aircraft and Transport Corporation had acquired Hamilton Aero, of Milwaukee, Standard Steel, of Pittsburgh, had countered by recognizing the Reed patents and taking a license from Curtiss-Wright. Standard paid Curtiss royalties, and in exchange Curtiss agreed to sue all infringers of the patents—including Hamilton.
Fred Rentschler, as president of United, had not relished a patent suit with Curtiss and had therefore bought up Standard Steel of Pittsburgh from its local stockholders. This had given him freedom from the threat of suit because he had acquired the license in the transaction, but it had opened up other problems. The two propeller companies had been so highly competitive, it now seemed unlikely that either Hamilton or Kraeling could consolidate the two outfits into a single company; they needed new and neutral management. Furthermore, since the consolidation had brought the two manufacturers into one group, the action had deprived the Army and Navy of their cherished competitive sources and had substituted instead a potential monopoly.
It was like old times to chin with these friends about their business problems and to become, for an evening at least, a part of the world I had once lived in. In that world, petty personal jealousies had to be subordinated to business principles. Only in a semipolitical organization, such as the Army or Navy, where there was no financial statement to measure the quality of leadership, could men indulge in such extravagances as personal politics. Of course in business, personalities did exercise strong influences, but in the long run, economics seemed to write the answer to the business equation.
After a visit in Los Angeles, Rentschler and Bill Boeing flew to San Diego to call on the Navy. Taking off in my little Vought Corsair, I went ahead to introduce them to the new command down there. Then one evening as we sat together in a bedroom of the old Hotel del Coronado, that relic of the lush boom days of Southern California, Tom Hamilton and Bill Boeing turned in, leaving Fred and me to talk shop. Fred was back on his propeller problem, wondering if I, by any chance, could suggest a possible new president for the consolidated company. He had, of course, kept in touch with the gossip in BUAERO over the controversy with FLEET AIR, and was aware of its influence on my personal situation. The talk drifted naturally to this subject, and before I was aware of its drift, Fred had invited me to take over the propeller job.